Did you know that 71% of buyers currently purchase real estate in the Emirates to obtain a residence permit or citizenship? And this is 8% more than a year earlier. At the same time, the share of purely investment transactions decreased from 19% to 12%, which indicates a significant change in priorities in the market.
The key factors determining the choice of a country for buying real estate in 2025 are:
- rental yield (in the UAE it reaches 8-10% per annum),
- the ease of obtaining a residence permit,
- tax regime and prospects for growth in the value of the asset.
And how are things in Europe in the meantime?
- France is demonstrating a stable price growth of 5-7% per year, while in Paris the cost of luxury housing reaches €20,000 per square meter.
- Hungary attracts with more affordable prices. In Budapest, the price is €2,000 per square meter, with a potential for growth of 10-15% per annum.
- Greece, which remains fourth in popularity, offers a “golden visa” for real estate purchases from €250,000. Price growth in Athens’s premium segment has reached 6.4% per year.
- Even though the commercial real estate market has many nuances and pitfalls, Spain attracts investors in this particular direction. Residents of different European countries and beyond are ready to invest in commercial real estate with a yield of 7-9% per annum with a minimum investment of €500,000 to obtain a “golden visa”.
While real estate in the CIS is fading into the background in many respects (even for CIS residents), a new player is entering the ring. An interesting market turn towards Asia is currently taking place. Thailand and Indonesia offer an attractive price-growth potential ratio. In Bali, for example, the annual rental yield of villas reaches 12%, and the cost per square meter starts at $1,500. In Phuket, the average payback on investment in resort real estate is 6-8 years, costing $3,000 per square meter.
These trends are shaping a new reality in the international real estate market. Here, investment decisions are increasingly made based on a comprehensive analysis of not only financial indicators, but also opportunities for global mobility, relocation, migration, and international business. This transformation creates the need to revise the existing requirements for foreign investors and adapt the legislative framework to the new realities of the market. Which the UAE authorities are currently actively doing.
Read also: Resale of housing: nuances and risks.
Conditions and restrictions for non-resident investors
In recent years, the investment climate in the UAE has undergone significant changes, opening up more and more opportunities for foreign investors in the real estate market. At the same time, the regulatory system retains certain restrictions that are important to consider when planning investments. The essential condition for non-residents is the ability to purchase real estate only in special freehold zones, where complete ownership is allowed. Outside these zones, foreigners can only get long-term leases for up to 99 years.
The financial side of investing also has its peculiarities. As they say, there is a nuance. To obtain a mortgage loan, non-residents must make a significant down payment – at least 25% of the cost of the property. Banks often put forward stricter requirements. Especially for foreign borrowers. This may include a valid resident visa and official employment in the UAE, which is extremely difficult for a digital nomad to obtain. Particular attention is paid to a potential borrower’s credit history and income level. It is worth noting that the maintenance of residential real estate in the UAE is at the highest level, which makes investments even more attractive, despite the strict financing requirements.
An important aspect is visa support for investors. To obtain an investment visa, you must invest at least 1 million dirhams in non-commercial real estate in a freehold zone. If the property is purchased with a mortgage, you must at least 50% of the total cost and obtain special permission from the bank. Interestingly, modern concierge service software, implemented in many luxury complexes in the UAE, significantly simplifies the property management process for foreign investors, making ownership more comfortable.
Statistics show growing interest in the UAE real estate market. In the second quarter of 2024, sales increased by an impressive 43.8% compared to the same period in 2023, reaching a record 124 billion dirhams (about 33.7 billion dollars). This was also facilitated by government initiatives, including lowering the investment threshold for obtaining a golden visa. According to current trends, the market’s premium segment is actively developing today, attracting wealthy foreigners to prestigious areas such as Jumeirah Bay, Palm Jumeirah and World Islands.
At this stage, the real estate ownership system in the UAE provides for three main formats:
- freehold (full ownership),
- leasehold (long-term lease from 10 to 99 years),
- commonhold (shared ownership).
Each format has its characteristics and restrictions. For example, with shared ownership, each investor’s share must be at least 750,000 dirhams to obtain a resident visa. Such a structured system, combined with an active policy of attracting foreign investment, makes the UAE one of the most promising areas for investing in real estate despite the existing restrictions.
Rights of foreign investors in the UAE
The United Arab Emirates revolutionized the rights of foreign investors to real estate when they passed the Foreign Investment Law in 2018. This legislation radically changed the situation for foreign buyers, granting them the right to full ownership of real estate in specially designated zones – freehold territories. Until now, foreigners were legally prohibited from acquiring real estate in the UAE. Dubai is beautiful to foreign investors, with about 50 freehold zones offering various properties in various price categories. Unlike many other Middle Eastern countries, where the rights of foreign investors are significantly limited, the UAE provides foreign buyers with almost equal rights with residents in specially designated zones. Some investors joke that they receive far fewer advantages in their home countries than in the Emirates.
A significant advantage of investing in the UAE is the absence of taxes on rental income and capital gains. For comparison:
- In the UK, capital gains tax on the sale of real estate can reach 28%,
- In the USA – 20%,
- In Singapore, an additional stamp duty for foreign buyers is 30% of the value of the property,
- In the UAE, the only mandatory fee is a 4% tax on the transfer of ownership in Dubai and 2% in Abu Dhabi.
This resembles a game of contrasts, with the Emirates winning with a score of 1:0 so far.
The property registration system in the UAE is transparent and reliable. The Dubai Land Department uses modern digital technologies, including blockchain, to ensure the security of transactions. Investors receive reliable protection of their rights through the Title Deed system – an official document of ownership, which is registered in the state registry. Title Deed is also used when gifting housing to immediate relatives (children, parents, spouses).
If we delve into the rights in more detail, the system of resident visas tied to real estate investments deserves special attention. As mentioned above, when buying a property worth 750,000 dirhams (204,000 dollars), the investor receives the right to a two-year visa. This is the basic option. But already with investments of 2 million dirhams – for a ten-year “golden visa”. A similar system exists in some European countries, but the minimum investment thresholds there are much higher: for example, in Portugal, to obtain a “golden visa” you need to invest at least 500,000 euros. And this sounds highly unrealistic for the average person. But is the UAE’s system for protecting foreign investors’ rights as perfect as it seems at first glance?
Advice for foreign investors
Investing in UAE real estate requires careful planning and understanding of local specifics. Of primary importance is the ownership choice (which we discussed a little above). When choosing the ownership form, it is necessary to consider long-term plans for using the property and the possibility of its inheritance.
Specialists familiar with the peculiarities of local legislation should provide legal support for the transaction. It is important to remember that in the UAE, there are restrictions on owning real estate through foreign trusts and funds. Offshore companies are prohibited from directly owning real estate in designated zones, although it is possible to set up a company in free zones approved by the Land Department.
Read also: Credit conditions for non-residents.
The cost of housing indicated on the website of the developer or real estate agency is not final. When planning your investment, you should consider additional costs:
- registration fee (around $1,000),
- title deed fee ($150),
- no objection certificate fee ($1,350),
- agent’s commission (2% of the property value),
- property maintenance costs (annual maintenance fee is $36-50 per square meter).
Conclusion. Investing in UAE real estate opens up great opportunities for foreign buyers, providing them with reliable legal protection and attractive terms of property ownership. I, Konstantin Lyutovich and my team at 20-88 Real Estate, having worked with more than 3,000 clients from 32 countries and helping to invest amounts exceeding $ 110 million over the past year, have seen a steady increase in interest in the UAE real estate market. Our clients’ record capital growth rate at 289% demonstrates the potential of this market with the right approach to investing. Compliance with all legal requirements and careful investment strategy planning allow you to maximize the benefits of investing in UAE real estate. And we are ready to help you take the first step towards new financial prospects. Was this article interesting and useful? Want to learn more about the real estate market in the UAE? Subscribe to the website of Konstantin Lyutovich, co-founder of a real estate agency in Dubai, and get notifications about new publications.
